During World War I, a German officer infiltrates the British naval base at Scapa Flow, not realising that his contact has been discovered and replaced by a British agent. Although they seem attracted to each other, Hardt remains committed to his sabotage mission, and ’Joan' to ensuring it fails.
Powell's direction, aided by Vincent Korda's art direction, creates a series of memorable images around the looming menace of the U-boat and the commanding figure of Veidt, dressed in the black of uniform or disguise. But it is in the dramatic ambiguity of the scenes between Veidt and Valerie Hobson that the film achieves its most subtle effect. Both Powell and Pressburger had hit their stride, stimulated by the other's unusual talents. The film also benefited greatly from being released in August 1939, and was still in the cinemas when war was declared in September. Audiences easily transposed its First World War setting into the present, especially when a U-boat was reported to have entered Scapa Flow and torpedoed a British warship.
Ian Christie (Michael Powell & Emeric Pressburger: Arrows of Desire)